Zacks Earnings Preview: Oracle, FedEx, Alcoa, J.P. Morgan and Wells Fargo

  Zacks Earnings Preview: Oracle, FedEx, Alcoa, J.P. Morgan and Wells Fargo

PR Newswire

CHICAGO, April 8, 2013

CHICAGO, April 8, 2013 /PRNewswire/ -- releases the list of
companies likely to issue earnings surprises. This week's list includes Oracle
(Nasdaq:ORCL), FedEx (NYSE:FDX), Alcoa (NYSE:AA), J.P. Morgan (NYSE:JPM) and
Wells Fargo (NYSE:WFC).


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Econ Data Turns Market Bearish

The market's mood appears to have shifted following the recent run of weak
economic data, with investors grudgingly acknowledging that the economy may
not be in as good a shape as everybody had expected. May be it's the typical
seasonal weakness that we have become accustomed to in recent years, or maybe
it's the delayed impact of the budget sequester and other tax law changes. It
will take the market some time to figure that one out, but we have the 2013 Q1
earnings season to keep us busy.

The Q1 earnings season has started already, with reports from 22 S&P 500
companies already out. It has been a mixed bag thus far, with a few notable
misses from the likes of Oracle (Nasdaq:ORCL) and FedEx (NYSE:FDX). But this
is still quite early in the season, and we wouldn't get a good flavor of this
reporting cycle for another two to three weeks.

This week brings in earnings reports from 34 companies, including 9 S&P 500
members. We will get Alcoa's (NYSE:AA) report after the close on Monday, but
will have to wait till Friday morning to get the week's key reports from J.P.
Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC).

In terms of earnings growth, the banks are facing tough comparisons, as
results in the first quarter of 2012 were very strong. The challenge for the
group is to balance the net interest margin pressures and muted loan growth
with continued momentum on the mortgage side and a healthy enough capital
markets business. Wells Fargo and J.P. Morgan are both among the better-placed
of their peers; many others are not so well positioned.

We will have to wait another week to get a good sense of banking sector
results, but expectations are for total Finance sector earnings to decline by
-3.8%, which would come after the sector's +10.3% +23.3% earnings growth in
the preceding two quarters, respectively. Tough comparisons are a major
culprit here -- the first quarter of 2012 was the strongest quarter for the
sector since 2009.

Total earnings for companies in the S&P 500 are expected to be down -2.6% from
the same period last year, which reflects -2.4% decline in revenues and
essentially flat margins. Tough comparisons account for the bulk of the weak
growth outlook for the first quarter – the first quarter of 2012 still remains
the highest point for quarterly earnings since the start of this earnings
cycle in 2009. Total earnings were up +2% in the fourth quarter.

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